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With a sizable portion of American workers doing temporary, contract or on-demand work, the pressure is on everyone — companies, policymakers, the retirement industry and workers themselves — to figure out ways to make them better prepared for retirement.

They don't have much time to get it done, according to some projections.

Nearly 1 in 5 U.S. workers, on average, will be contingent by 2020, says the EY Contingent Workforce Study, with other private-sector surveys projecting even higher numbers. And when part-time workers are included, as much as 40% of the workforce or more could be in nonpermanent employment by 2020, the EY study found.

Complicating matters is that "gig" workers are hard to categorize. Despite perceptions that gig workers tend to be younger, a new Bureau of Labor Statistics survey of contingent and alternative employment arrangements released in June found that the largest cohort (37%) were workers 55 or older.

The BLS found that as of May 2017, 3.8% of workers held contingent jobs that were temporary or short-term. In addition, 6.9% were independent contractors, 1.7% were on-call workers, 0.9% came through temporary help agencies and 0.6% were provided by contract firms.

A 2018 report on the gig economy and retirement from Betterment, an online investment management firm with $14 billion in assets under management, divides workers into two categories: "full-time giggers," who rely on those jobs as their main source of income, and "side-hustlers," who supplement a regular job with independent or temporary work.

Based on an online survey conducted in February, the report found that 7 out of 10 full-time gig workers are unprepared for retirement, with 3 in 10 setting aside no money for it. A third of the survey respondents did not expect Social Security to be around when they retire. For a third of the side-hustlers, a lack of retirement savings is their main motivation for gig work, and that number increases the closer they get to retirement age.

A Harris Poll survey conducted for Prudential Financial Inc. and released June 26 looked at a nationally representative sample of 1,524 workers, broken down by generations. Of the 577 exclusively gig workers, 20% were millennials (ages 18-35), 45% were Generation X, (ages 36-55), and 35% were baby boomers (56 and over).

Generational differences

While millennial gig workers choose gig work for its flexibility and freedom, for Gen X gig workers and boomers, it was more of a financial necessity, the poll found. Among Gen X gig workers, 63% were struggling financially, compared with 49% of millennials and 32% of boomers. In a very real sense, both Gen X and boomers are battling the clock, in that they have less time to improve their finances before they reach retirement age.

Still, baby boomers might be better off, the survey said, because they have higher, and more sources of, income and access to employer-sponsored benefits. They're also more likely to own homes, be married and have older children.

"We are really seeing [the findings] as a call to action" by advisers, employers and policymakers who can collectively help gig workers set up retirement savings plans, said John J. "Jamie" Kalamarides, president of Prudential's group insurance unit.

When Prudential looked last year at three types of workers — full time, gig only, and gig-plus (full-time workers doing gigs on the side) — "we found that access to employee benefits varies dramatically among those three groups, and the gig-only workers really lacked access," Mr. Kalamarides said. While 52% of full-time workers have access to employer-sponsored retirement plans through an employer or a spouse's plan, only 16% of gig-only workers have access.

One bit of good news came from T. Rowe Price Group in April as part of a survey on financial attitudes and behaviors in the gig economy.

That survey found that 78% of gig workers consider themselves more involved in their personal finances. Among respondents with investible assets outside of an employer-sponsored retirement plan, 60% surveyed said they manage their own investments, compared with 50% of those employed traditionally. For 68% of respondents, gig work was perceived as a choice, not a necessity.

"This may suggest that gig work offers an opportunity for workers to reach their financial goals," said Stuart Ritter, senior financial planner for T. Rowe Price. "It's really encouraging to see that they are building similar levels of income as traditional workers."

The survey defined gig economy employment as independent full- or part-time work — including temporary, freelance and contract employment or business ownership.

Now what?

The proliferation of surveys is one indicator of the increasing attention being paid to retirement needs of workers without access to traditional employer-based retirement programs, and a critical first step toward solutions, industry experts said.

At a May policy forum on gig workers held by the Employee Benefit Research Institute in Washington, ideas ranged from more state solutions — including Secure Choice IRA programs and retirement marketplaces — to greater use of open multiple employer plans and more portable employer-sponsored defined contribution plans.

Just like the gig economy itself, financial technology could also help solve the retirement gap for these workers.

Drivers for Lyft, an on-demand ride service, are offered a payroll-deduction IRA through Goldman Sachs Group's fin-tech firm Honest Dollar, with a recommended portfolio designed by Goldman Sachs Asset Management. A competitor, Uber, partnered with Betterment for more than two years to provide drivers with access to an IRA and a variety of savings options, plus financial counseling. Uber offered the program free for one year and then at a discount in the second year.

A Betterment spokeswoman said the free and reduced-price program, which recently ended, had signed up "thousands" of drivers and that it expects continued interest going forward because of its easy access and no-minimum balance requirement.

For the so-called secure choice auto-IRA programs launched or under development in California, Connecticut, Illinois, Maryland and Oregon, and being discussed in many other states, making them available to contingent workers has been part of the discussion.

"We are definitely concerned about gig workers and contingent workers," said Jason Malinowski, chief investment officer of the $2.8 billion Seattle City Employees' Retirement System, who is the investment representative board member of the Seattle Retirement Savings Plan, the private-sector auto-IRA program mandated by the city in late 2017. Now under development, it will allow gig workers to opt in when it opens in 2019.

"It presents a bit of a challenge to programs like this. We can require the employer to automatically enroll their employees, but with the gig worker, you don't have that nudge." On the plus side, Mr. Malinowski said, "these accounts are strictly portable, so if anyone ever had a job, that IRA account will be with them forever."

"I think that process of making someone comfortable saving is very important," Mr. Malinowski added. With an estimated 200,000 uncovered workers of all types in Seattle, officials there are also open to collaborating with other states to have economies of scale, like some states have done with savings programs such as ABLE. "It makes sense to partner in that instance. I think it's going happen," he said.

Oregon moves up timeline

Gig workers also are on the minds of other states considering or designing secure choice programs.

Oregon, the first state to launch a mandated auto-IRA secure choice program, had such demand from the gig economy that it is adding the opt-in feature for those workers one year earlier than planned. Opt-ins are expected to start in October.

"It was clear that Oregon does have a lot of these folks. … We wanted to make sure that this program could be available to anyone who wanted to be in," said Michael Parker, executive director of the Oregon Savings Network, which includes college savings, ABLE and now secure choice accounts.

Oregon officials are working with associations and other groups to get the word out. "I would love to see, 20 years from now, the positive financial impact it will have just on state services. These kinds of programs really can go a long way toward giving people better retirement outcomes and putting less pressure on state resources," Mr. Parker said.

Lisa Massena, vice president of business development for Ascensus LLC's government savings retirement business, who served as the first director of the OregonSaves program, is a big proponent of opting in.

"If a state has a program, and it allows for opt in, it's just one more powerful tool for savers," Ms. Massena said.

As Maryland works on its secure choice program design, newly signed legislation allows gig workers to opt in, and "since we're planning a fully automatic enrollment process, it shouldn't be too difficult," said Joshua Gotbaum, chairman of the Maryland Small Business Retirement Savings Board. The program is expected to start in 2019.

Ms. Massena is now helping states that are actively interested in secure choice programs, which she counts as all but eight states, as they think through how to take the next step.

"The question on the table right now is, what comes out of 2019 (legislative) sessions, whether it is a program or a study. I think the states are one more really good opportunity and a step forward," particularly for lower-income workers, she said.

She agrees with Mr. Malinowski that it is helpful not only to have an auto-IRA for traditional workers, but "then you give everyone else access, you have everybody in a state talking about it. I think what we are going to see through these processes is people are going to get more educated" about saving for retirement, Ms. Massena said.

While considered an important retirement savings tool, IRAs do have much lower tax-preferred savings limits compared with defined contribution plans. Single filers in 2018 can save $5,500 annually in an IRA vs $18,500 for a 401(k).

Marketplace option

Washington state chose the retirement marketplace route, a program administered by the state Department of Commerce with private-sector retirement providers handling enrollment. It is open to self-employed, part-time and temporary gig workers.

The Washington marketplace, which launched March 19, prescreens simple, low-cost accounts suitable for independent workers, and a similar one is under development in New Jersey.

"State-sponsored retirement programs have been making all the difference in helping to move the needle on expanding options and access to retirement savings plans for contingent workers," said Angela M. Antonelli, executive director of the Center for Retirement Initiatives at Georgetown University. "These programs have put a spotlight on the access gap, are being proactive, and have prompted the private sector to also respond to fill the gap" with online platforms and apps marketed to contingent workers.

Currently, MEPs can be offered only through state plans, but Congress could also allow them to be offered by private providers. "It's time that Congress stops penalizing gig workers and lets the market take the wheel by allowing open MEPs," said Sen. Mike Enzi, R-Wyoming, chairman of a Senate panel on retirement security, in a recent commentary contributed to P&I. "Workers should not have to choose between flexibility and retirement security."

While modifying ERISA to allow gig workers into programs like MEPs "would be a big lift," Prudential's Mr. Kalamarides said, Congress could allow them to be offered by professional associations, where interest is growing.

Josh Cohen, head of institutional defined contribution for PGIM, the global asset management arm of Prudential Financial, said that as some employers struggle with their fiduciary demands, an open MEP is also a way to outsource, which in turn can create more institutional solutions, particularly for smaller employers. Employers with large plans aren't necessarily ready for wholesale changes, but, "I think they want to get a handle on it," Mr. Cohen said, adding that more information and data on workforce trends are needed.

Solutions for the unconventional workforce are "coming up far more frequently" in client discussions, said Shane Bartling, senior consultant with Willis Towers Watson in San Francisco. "It is creating new questions and new opportunities for the benefit professionals."

What might be considered depends on types of workers used, and for what duration, "but especially in competitive situations, you need to have more of a value proposition for the relationship. I think you are starting to see employers recognize those opportunities," Mr. Bartling said. "Plan access, technology, financial counseling services, preferred rates and terms from a financial product standpoint are all attractive. It can create a competitive advantage for the organization."

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